How to Reduce Your Small Business Debt?
- September 4, 2017
- Posted by: Quarles Business and Financial Strategists
- Category: Business Advice
How to reduce your small business debt?
Carrying some debt is a common part of running a small business and while running a debt free business is not often possible, by reducing your debt you can also reduce your stress while increasing your profits simultaneously.
However, how do you do this when debt is a necessary evil that keeps your business running? Keep on reading to find out how to reduce the debt of your small business successfully.
Know what debt you have and make a plan of how to get on top of it.
It may seem like the debt is just never getting any smaller and that it is just going to be there forever. To stop this feeling and get on top of your debt, take a moment to look at your debt critically. Know exactly what debt you have and what you need to do to reduce it.
If you have not got a budget yet, consider creating one. This will help you to determine how much of your income you can allocate each month to paying off your debts. The most important part of this step? Sticking to the plan. Learn How to create a small business budget
Reduce your operating expenses – 5 ways to reduce operating costs
By decreasing the cost it takes for you to operate you can put that additional cash into paying off your debts. It sometimes can be hard to find ways to reduce operating expenses, especially if you feel your business is already running as efficiently as possible. However, have you considered some of the following things?
- Compare service providers for things like insurance, phones, internet etc. It is an annoying process but one that can save you thousands every year if you do your homework right.
- Negotiate rates and charges with your suppliers; you may be able to get some discounts. You never know unless you ask.
- If you are leasing an office and have unused space, have you considered subletting? Alternatively, maybe even working remotely if you can.
- Staff reduction. It is not a nice thought, but by reducing your employee’s numbers now, you can potentially prevent all of your staff losing their jobs if you cannot get your debt under control.
- Be careful with stock levels. Don’t order more stock than you need and try and sell on any excess you may have that you are not.
Consolidate your debts
That loan you took from the bank to finance your business, that credit card from another bank you use to pay bills while waiting for customers to pay their invoices and then that other loan for a business vehicle. Does this sound familiar? It is very easy when operating a small business to end up with a couple of different debts.
One of the best ways to get on top of your debt is to consolidate it. Debt consolidation is when you take out one larger loan at a low-interest rate and use it to pay off a lot of smaller higher interest debts. By doing so, you will only have one repayment to make and will it hopefully get you started towards reducing your total debt.
Talk to a professional
Being aware you need to look for ways to reduce your debt is the first and most important step towards achieving it. However being wise enough to know when you need help is also important.
Sometimes it is necessary to call in the heavy artillery. If you have been managing your businesses finances and have been unsuccessful in reducing your debt, seriously consider speaking with a professional.
Whether it be an accountant, a debt management firm or a credit counsellor, these professionals have the expertise to review your finances and look for the best solution for reducing your debt successfully.
Is your small business debt getting on top of you? Not sure what the best way is to reduce it? Give the finance experts at Quarles a call. We have been helping small business owners successfully manage their debt for over 40 years. Let us help you get ahead.